The board of HF Sinclair Corporation (NYSE:DINO) has announced that it will pay a dividend on the 3rd of June, with investors receiving $0.50 per share. The dividend yield will be 6.2% based on this payment which is still above the industry average.
Our free stock report includes 1 warning sign investors should be aware of before investing in HF Sinclair. Read for free now.HF Sinclair's Projections Indicate Future Payments May Be Unsustainable
Estimates Indicate HF Sinclair's Could Struggle to Maintain Dividend Payments In The Future
HF Sinclair's Future Dividends May Potentially Be At Risk
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. HF Sinclair is unprofitable despite paying a dividend, and it is paying out 159% of its free cash flow. This makes us feel that the dividend will be hard to maintain.
Over the next year, EPS is forecast to expand by 197.8%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.
See our latest analysis for HF Sinclair
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was $3.28, compared to the most recent full-year payment of $2.00. This works out to be a decline of approximately 4.8% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Company Could Face Some Challenges Growing The Dividend
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. HF Sinclair has impressed us by growing EPS at 25% per year over the past five years. While the company is not yet turning a profit, it is growing at a good rate. If the company can turn a profit relatively soon, we can see this becoming a reliable income stock.
HF Sinclair's Dividend Doesn't Look Sustainable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would be a touch cautious of relying on this stock primarily for the dividend income.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for HF Sinclair that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.